Boparan plans for ‘toughest’ year after sales boost

16-Dec-2016 - Last updated on 16-Dec-2016 at 12:15 GMT

Boparan Holdings - owner of 2 Sisters - reported a sales boost of 5.1% in its first-quarter trading update

Boparan Holdings – owner of 2 Sisters Food Group – is preparing for “one of our toughest” years, warned ceo Ranjit Singh, after the food giant’s parent company reported an 11.9% rise in operating profit to £19.8M in the 13 weeks to October 29.

Boparan Holdings reported a sales boost of 5.1% to £818.2M in its first-quarter, compared with the same period last year. The manufacturer’s Chilled and Branded divisions drove the sales increase, with a 5.8% and 4.9% rise in sales respectively.

The UK’s Brexit decision meant the company was expecting challenges next year, despite the group’s “positive momentum” in the last financial year, Singh said.

“We expect strong headwinds in 2017 and the business is taking action now to prepare for these challenges,” he said.

‘Currency-driven inflation’

Boparan Holdings’ first-quarter trading update – at a glance

Sales up 5.1% to £818.3M
Operating profit up 11.9% to £17.7M
Expected strong headwinds and challenges next year

“The market remains very difficult following the uncertainties around the UK’s decision to leave the EU. Currency-driven inflation and the price-pressured retail grocery market will make next year one of our toughest.”

Boparan Holdings’ Chilled division boosted operating profit by 209.1% to £3.4M, the manufacturer reported. It was on track in its investment projects, Singh said, with new major launches in its traditional British ranges, and early launch of new Christmas sandwich ranges.

New premium ranges at the firm’s Fox’s Biscuits brand helped raise the Branded division’s operating profit by 30% to £10.4M. It had mitigated ingredient inflation costs with cost-to-serve and logistics initiatives, the company said.

‘A volatile operating environment’

But the manufacturer was well placed to tackle the expected challenges next year, it said. Targeted investment would help to drive profitable sales and “protect the business in a volatile operating environment”, it added.

Singh said: “Our investments will unlock cost efficiencies and help accelerate our growth programmes across the Group. Running parallel with this, we are focusing strongly on a ‘cost out’ and efficiency culture throughout the organisation, with some significant benefits already delivered.

“Our ‘Better Before Bigger’ strategy underpins our drive to maintain excellence in a cost-conscious operating environment. We are well positioned to negotiate the predicted 2017 headwinds and to ensure we deliver for customers on quality, service and price.”